Luis Oganes - Managing Director and Head of Global Macro Research at J.P. Morgan

[Music] My name is Arshand and welcome to another episode of the LSE Folk Point podcast. Today I'm delighted to be joined by Luis Oganes, managing director and head of Global Macro Research at JP Morgan, where he leads teams covering rates, currencies, commodities, and emerging markets globally. Luis has been with JP Morgan since 1997, working across New York and London. He holds a PhD in economics from New York University and a BA in economics from University of Lima. Welcome to the podcast, Luis. It's great to have you on. Thanks Arshand for inviting me. Pleasure to be here. If we can start off, could you just tell us a little bit about yourself, your career journey so far, and what first drew you to economics? I come originally from Peru. I studied economics in Lima as an undergraduate, worked for an economic consultant firm for three years before deciding to go to the US to pursue a PhD degree in economics. I went to NYU. I think when my motivation was at that time, we're talking about the late 80s, early 90s. The economic situation in Peru was quite dire, completely different from where it is right now. There was quite a bit of a motivation to understand what was going on in my own country and that was probably the primary reason why it decided to study economics or further my training in economics. Of course, the idea was to try to process the information, analyze the situation and come up with solutions, policy solutions. That was the original implying of pursuing economics. When you started off your career, was there any particular challenges that you faced at the very beginning that you can remember? You started at PhD and you think that you know everything and when I first joined, being in these risk meetings on Monday, where traders, sales, researchers, everyone joins to just discuss what was happening in markets, what the opportunities were. I thought that we were all rocket scientists. I could not understand what they were talking about. A lot of terminology was quite foreign for me. Things that you just don't look at when you're doing an academic paper, notions like market technicals or whether a particular market or a particular asset is overbought or oversold, things like that. Of course, the incorporation of political risk, geopolitical risk, there were quite foreign notions to me, typically, yes, I think that economic models are getting a lot more sophisticated as some of them are incorporating this type of factors, but that was certain and at that time for me. It was a learning process. To be honest, it's a learning process that never ended. I think that we're all one way or the other continue to learn just because that challenges for economies, for markets, for policymakers, for the global geopolitical setup is a constantly moving space and we're all constantly being forced to adjust. That's the nature of this job. Definitely. Thank you for that. You've been doing this for almost three decades. I'm quite interested in how the actual process, one that arriving those conclusions has changed over that time with technology and new tools that you have access to and perhaps also how maybe client needs have changed or the things that clients are demanding from you. Have those changed over time? What does the future look like? And perhaps also this wouldn't be a podcast in 2026 if I didn't ask about AI and how you think that's going to impact your role and the role of members of your team. And perhaps also client needs. Yes. So definitely, the nature of markets has been changing, that demands of investors and their needs or how they consume research has been changing and we have been forced to change alongside. We want to stay hopefully at a forefront of things and respond to this evolving client needs. In terms of analysis, some of the biggest changes and innovations in the things that we do is the corporation has a lot more data science. There's a lot more information available and the ability, we need to have the ability to incorporate a lot more of that information into whatever we do. Alternative data and process information that technology now enables us to incorporate that it was not available certainly three decades ago when I started doing this. So that is probably one of the biggest change. You mentioned AI aware and the tremendous pressure to look to incorporate AI into everything we do. And the hope is that we're going to become much more productive because so many things that are taking time, we can do it at a fraction of time hopefully. And AI can help us identify things or reach conclusions that would take us a long time to do it ourselves or that we may never arrive at just because maybe we don't devote the resources of time. So I think it's a huge opportunity. There's obviously the anxiety factor as to whether AI is going to replace our jobs. But to be honest, I think the people that are going to be replaced are the people that do not incorporate AI into their day to day that they cannot gain the edge and the productivity that these AI tools provide. The content still needs to be developed by a human being. So AI can help us process it and can help us come up with a more concise and cleaner product for the consumer. But the content generation is not something that can just be left to a machine. So I think when I look at what we're doing in research here at J.B. Morgan, certainly there's a lot of, as I said, pressure to incorporate tools. And I would say that probably the profile of how people are located at time, a year from now, five years from now, ten years from now, it's probably going to be very different compared to what we were doing before. Right? We're doing before. And again, I manage my global team, right? People spread over 10 countries. You know, not everyone is a native English speaker. Everyone has different styles of writing. And so with a lot of time, when you read J.B. Morgan Research Report, it feels like it is one person that has written everything, even though it has been written by dozens of people coming from different backgrounds, different styles, etc. So all that AI is obviously helping a lot already in streamline that process of editing. I mean, something as simple. That is very time consuming, right? And the quality control at the end of the day resides on people on the more senior side into them myself. So again, all that is changing. You ask me on the consumption side of clients, they're also getting very smart about how they consume research. They get flooded by research from all kinds of sources. They dump them into, you know, some kind of LLM in order to simplify it, extract conclusions. I was surprised I had a 40-page presentation one time that I sent to a client before our meeting. By the time that I got to our meeting, they had used an internal LLM in order to turn my 40-page presentation into a 10-minute discussion between two people, a man or woman. This was in Spanish, funny enough. There was a translation in between. There was very colloquially discussing all the messages that I was discussing in my slides, right? And they distributed that 10-minute recording at the end, so it ended up being a little bit of a podcast, to all the team members that were going to be attended my meeting, just so that when we got to the meeting, it was a straight-to-question. I didn't have to repeat myself and it was much more productive, but I was surprised, right? How technology is allowing us to take things at a much faster pace, and I think that we need to be responsive and adapt to that world. Definitely. Thank you for that. Moving on to broader macro questions now and your outlook and your viewpoints. You were on Bloomberg's pulse in December of 2025. We were talking about the Jacobi Morgan's Outlook for 2026, and you mentioned this idea of global growth resilience. And I think resilience is the best way to put it. Over the last few years, it seems that we've seen this series of exogenous shocks. You've got COVID, parrifts, and now the Iran War as well. Each introducing tremendous uncertainty. From the outside, it feels like it's an almost unusually volatile period. Now, my question is that an accurate perception, or is there always been periods like this, or are we genuinely in sort of a different macro regime with more exogenous shocks? And how should people approach that? So, the issue of resilience is something that is a very important one. The shocks keep coming, and they come in different shapes. But there are some structural changes that I think are allowing these shocks to have much more limited impact compared to, or the global economy had experienced exactly the same shock 10 years ago, 20 years ago, 30 years ago. Probably the risks around that at that time were having a lot higher in terms of generating maybe much more of inflation pressures, much more potentially recessions than what has happened recent years. And partly, it is, there's a number of things at play here. Certainly, there's been probably a learning process that have allowed policymakers to be a lot more, but maybe faster in their policy responses whenever a shock hits during COVID. It was amazing to see how there was a compression of consumption and investment, right? Aggregate demand, private aggregate demand was collapsing just because we were all stuck at home. We were not able to move, we were not able to travel, we couldn't go to the office, and those of us that were working at an office were lucky that it was easier for us to work from home. Obviously, those were working in manufacturing, that was a lot tougher. So governments are on the world, they deployed fiscal resources in order to compensate that decline in private spending with more public spending, and that kept growth. There was a recession, but ended up being rather short-lived, because there was a bit of a cushion being provided by policymakers. Of course, we're paying still maybe the price for some of that, even though it was justified. Some countries displayed more large-gest than others, and maybe they didn't rein in these policies as fast as they should have, and we ended up paying with higher inflation, higher interest rates, etc. later on. But so be it, but that made the shock not be as bad and has dramatic as before. Most recently, and I'm talking about last year and this year, one of the key ingredients for resilience is actually AI and all these capex and all these investments that is taking place around the world. A lot of that obviously center in the US, but some of that is happening in Europe, a lot of it is happening in Asia. And those countries that are not seen directly the investment in AI in the data centers or these capex, this is that the countries are still benefiting because they provide sources of energy, which is needed to run all these data centers and/or commodities, right, metals, which is needed to build this infrastructure. So if the entire planet seems to be somehow relying on this capex cycle and we know that we're still in the early innings of it, this is a multi-year process. So for all that talk that this could be a bubble, et cetera, the reality is that we won't know. Certain that this year, women and on next year, maybe two, three years from now, the market will have elements to start assessing, you know what, there's been an over-investment in AI, right? And we don't need as much and then there'll be some winners and losers among the companies that are investing so much. And maybe at that time, there may be some type of market correction to reflect this. At this stage, it's twerling the game to have that type of clarity. And that's why you're seeing growth being quite strong. Despite all uncertainty, for example, as you're brought about by tariffs in the US, you have growth remarkably strong, much stronger than anticipated. And it was because AI, capex cycle, kind of offset all the uncertainty and all the lower labor demand and consumer confidence, business confidence being heard by all that uncertainty generated by the tarry. And that's how we're still, you know, world where, well, let's see what this oil shop with the Middle East war brings in the coming orders. But we started a year with a potential growth. And so at least there's a growth cushion there or maybe that oil shop brings us to potential. But we're still the base case, at least, this scenario of growth remains resilient this year. - Thank you for that. Stepping back like very broadly now, from the immediate outlook. What do you think are macro themes that will define the global economy over, let's say, the next five years? Is perhaps also AI part of that story for you? - Well, AI for sure is part of that story. So AI is probably, you know, one of the biggest technological revolutions that we are having, we're facing. It is meant to make us a lot more productive. It is meant to allow companies to do more with the same or to do the same with less. That's why there is this angle of anxiety about what that could mean for labor markets. So Tang will tell, to be honest, the range of opinions on these ones are quite broad as you know. But the reality is that we don't know. What we do know is that the best way of securing whatever any of us do in life that we don't get priced out or ended up jobless because of AI is to make sure that we understand AI and use AI in whatever we do, right? And that's the best hope that we have to basically grow with a process and not be priced out or, but that's going to be a key thing. You could think that because it is a positive productivity shock that is going to enable growth potentially to be higher. And maybe down the road also help to bring inflation lower. You know, certainly that is one of the, some of the posters of those in the US or in Fed circles that discuss that eventually the Fed, you know, will have room to catch right. It's because AI should help bring inflation lower. The question mark is when, right? I mean, and we're not seeing that yet. And certainly because of the oil shock that is blurring completely the picture. But you would think that a positive shock like that should eventually help not only, you know, boost growth higher and hopefully boost inflation lower. Just because we're going to be a lot more productive being able to do the same with less resources. Right. But again, that time will tell. Other things, you know, that are going to be shaping the macro, global macro picture, I think, in the years ahead is that well geopolitics. Certainly, although there are some tectonic shifts underway, right? We discuss them every day. We see aspects of them that, you know, is going to lead to, you know, realignments of supply chains. Probably new trade groups are going to be emerging or consolidating. And certainly there is a desire from the US to be a lot more self-sufficient and rely less on having to import some key resources or materials and trying to, you know, reassure the processing of some of these products, et cetera. That, I think, is not going to change. And regardless of what happens with the political cycles in coming years. So, you know, that present is obviously challenges, but also huge opportunities for many countries, right? That they want to be, you know, to, you know, hopefully, you know, they'll have leadership, leaders who understand these tectonic shifts and prepare their countries, pursue reforms, you know, to, you know, make them be part of this realignment of supply chains. And so that is, I think, what we're going to be seeing and monitoring in the years ahead. Certainly, this distrust that we see between the US and China, you know, will continue. But, you know, given that we're talking about the number one and the number two economy in the planet, I think that, that this entanglement, that the coupling cannot be a decoupling all the way to zero, right? There's going to be some type of maybe decoupling, but there's going to be a new steady state where each other needs to accept that there's some degree of dependency that it's just too costly to bring to zero. That they're going to need to reach a new steady state that they feel comfortable with each other's presence, right? And, and I don't know how far we are from that point, but that's something that also is going to keep shaping. I think it's going to be in the radar of all of us, you know, looking at a global macro trends. Thank you so much for that. Going into my last two questions. I'd like to start off with, is there anything that you are watching, reading, listening to at the moment that you could share with listeners? It doesn't have to be work-related, but it can be. When I have those few moments that I have, that I stop working, that I can read things that are not work-related or enjoy activities that are not work-related, my passion is contemporary art. So I'm always looking wherever I travel. If there's any particular exhibition, and I have a two hour break to just go and swim by, and this is where I keep this my hobby, that's where I spend a lot of time and try to devote. Whatever energy is left from not using work to get involved. Thank you so much for sharing that, Luis. Now, my last question. Do you have any parting advice for young students just starting out, perhaps that young undergraduate who is considering a career in macro research? More interested in emerging markets? Why should they be interested in the space? What advice do you have for them? And is it just about being the best economist or is there something else that matters to being interested in the space? I'd love to hear your advice. For anyone interested in a career in macro, it is a combination of skills that I think as a student, you want to develop. Certainly, economics is the absolute basis, right? But you don't have to have knowledge of finance, of how markets work. And increasingly, you have to have the ability to incorporate politics, geopolitics into the mix, because they do matter for markets, right? So if you look at the profile of people that we have in our teams, it's interesting. Some come from an economics degree, some come from a finance degree, and the finance is quite broad. A lot of them actually started as engineers or started as even degrees in physics or very quant degrees. But a lot of these quant skills are transferable. They end up transferring them into finance. And there are some people that come from political economy, type of degrees that also are part of a team. So yeah, if you can develop all these skills in all these three areas, I think that that would be a good basis to pursue a career in macro. In terms of the tools, I already mentioned AI, right? That ocean of AI is gaining pace. So you have to be conversant on coding skills are becoming almost like a mast in our work these days, right? And choose Python, choose R, whatever it is. But that's almost like a prerequisite. And more broadly, I always tell people, you should be reading a lot. Just trying to understand the world we're living, connect adults, how events in the Middle East, what is the connection between what's happening to oil prices and what the Fed is doing. Markets are pricing. We're pricing cuts. Now they're pricing no cuts. Or at some point, they were pricing possibility of hikes. How does that come about? Why the dollar appreciated earlier in the conflict? So you have to go negative. those dots. And it'll be, it'll not only make a good impression if you can elaborate or or provide your own views during an interview process. But once you're working, you will have that type of framework or that type of inquisitive mind to be able to connect these dots is very important. And once people are in junior positions here at the bank, I always tell them, right? Try to connect also whatever you're doing, whatever market you are, a monitoring covering. Try to link it to the broader picture, how your analysis is being used by the business directly or which other businesses around the bank could use your analysis. And that way, you know, that's a good starting point for internal networking, right? To make sure that people that are using information or could use information that you are providing get to know you. So part of career advance is, is, you know, visibility, right? And, you know, way we, and that is also for a junior that starts, that also often times doesn't come easy, right? So a lot of people are very good at sitting in the desks, crunching numbers, coming up with a, a, a, conclusions publishing, etc. But then the marketing aspect is very important. And that's perhaps the biggest difference between, you know, being in academic research position versus a market research that we're all meant to be marketers, right? And, and we have such a broad range of clients that we have to interact with, you know, institutional, via hedge funds or real money, you know, corporate clients, it's so very well-fanned, it's governments themselves, it's central banks. And we need to cater and adapt our message and adapt our language and how sophisticated, how complicated or how simple we need to be depending on the audience, right? We cannot apply the same message to everyone because just as our some of them are going to get bored because we're too simple and or some of them are going to get lost because they just don't understand what you're saying, right? So that's the marketing aspect is also very, very important. Thank you so much for that, Luis. I'm really glad you've got advice there. That brings us to the end of our conversation. If you enjoyed this episode, stay tuned for more and follow LSE focal point on all platforms to get notified of new episodes. Once again, Luis, thank you for taking the time out of your busy schedule to speak with us today. Thanks, Archen, for having me. A pleasure.